ArrowMark Financial Corp.

Welcome to the Stone Tassel Financial Corp Q3 2020 Investor Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Now, I would like to turn the call over to Rachel Shatton, General Counsel of Stone Castle Financial. Please go ahead.

Good afternoon. Before we begin this conference call, I'd like to remind everyone that certain statements made during the call may be considered forward-looking statements based on current management expectations that involve substantial risks and uncertainties. Actual results may differ materially from the results stated in or implied by these forward-looking statements. This would depend on numerous factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of shares of common stock, the continuation of investment advisory, administrative, and service contracts, and other risks discussed from time to time in the company's filings with the SEC, including annual and semiannual reports of the company. Stone Castle Financial has based the forward-looking statements included in this presentation on information available to us as of September 30, 2020. The company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as today, November 12, 2020. Now, I will turn the call over to Sanjay Bosley.

Thank you, Rachel. Good afternoon and welcome to Stone Castle Financial's third quarter investor call for 2020. Here with me today is Pat Farrell, our CFO, and Julie Morocco, Investor Relations. During today's presentation, I will briefly comment on the banking industry and credit markets before commenting on the company. Then I will provide Stone Castle Financial's quarterly results and portfolio review, and Pat will provide you with greater detail on our financial results before we open the call for questions. During the past few weeks, we saw several banks reporting better than expected earnings for the third quarter, and many banks are signaling that they are well positioned to withstand a prolonged economic recovery. Furthermore, banks are well capitalized and, for the most part, have adequate reserves in anticipation of an increase in corporate defaults. The government stimulus issued in Q2 helped many businesses weather the third quarter And we believe that any additional stimulus going into 2021 will have the potential impact of keeping corporate default rates lower than expected. Going into Q4 and first half of 2021, our outlook for the banking industry remains cautiously optimistic. As with this call and with some exceptions, Stone Castle's underlying banks have reported third quarter results. Banks in our portfolio reported median net income up 8.4% versus the second quarter. In addition, our portfolio banks reported average tier one capital ratios of 12.4%, flat from Q2. Finally, Stone Castle's underlying banks reported change in median reserves up five basis points to 1.27%, and loan book growth was up 7.8%. I want to take a moment to mention some interesting statistics on community banks regarding the PPP stimulus program. The Independent Community Bankers Association reported that community banks exponentially serve their local and rural communities by providing PPP loans to 98% of the economically distressed or low-income counties and to approximately 97% of the rural counties receiving such loans. Overall, community banks were the dominant PPP lenders, serving approximately 58% of all PPP participants and 48% of all U.S. small businesses. The community banks also supported underrepresented small businesses with PPP loans, including approximately 74% to minority-owned, 72% to women-owned, and 64% to veteran-owned businesses. These statistics show the important role of the community banks within their communities and the positive impact that community banks have on economic development, financial inclusion, and job creation in the U.S. Now, let me comment on the credit markets for banks. During the third quarter, we saw credit spreads tighten for banking-related strategies by approximately 50 to 100 basis points. This was due to the residual of the Fed actions in Q2, but also due to a guarded optimism throughout the third quarter and the competitive environment for attractive banking-related assets. In Q3, we saw the primary markets continue to be more active in both alternative capital securities and community banking. in alternative capital securities, the pipeline of primary issuance in the fourth quarter and into the first half of 2021 is expected to remain active with anticipated new issuance of 3.5 to 4 billion. We are also seeing the issuer base continue to expand. In addition, we continue to see attractive yields for alternative capital securities in the secondary markets although not as advantageous as Q2. Community banking originations in the primary market was robust in the third quarter. The number of community bank issuances in Q3 were up approximately 50 percent from the prior quarter. Bank capital raised was $3.1 billion in Q3, down slightly from $3.7 billion in Q2. banks are generally able to issue sub-debt in the 4 to 6 percent range. We believe the current rate environment is allowing banks to issue sub-debt at historically low rates. The banks are issuing sub-debt to increase their term on capital and therefore will remain in a stronger position if the U.S. faces a prolonged economic recovery into 2021. Now to Stone Council financial results for the quarter. We are pleased to report that net investment income for the third quarter was approximately $2.8 million, or 42 cents per share, an increase of one cent per share from the prior quarter. At the third quarter end, the value of the investor portfolio was $147 million versus $165.8 million at the end of the second quarter of 2020, a decrease of 11% primarily due to the sale of the Community Funding CLO, which we purchased in 2015. I will have more comments on this sale in a few minutes. The net asset value at the end of the third quarter was $20.89 per share, up 62 cents from the prior quarter. Now let me turn to the portfolio review. During the third quarter, The company invested a total of $23.7 million, including $18.7 million in two alternative capital transactions, and $5 million in one subordinated note for a community bank. The three new investments contributed a weighted average effective yield to maturity of 7.83%, as all the securities were purchased from your market at par. The yields of these new assets remain accretive to our earnings. Since the Stone Castle Aramark transition over the last three quarters of reporting, the company has made approximately $60 million of investments, or 2.8 times the total dollar amount of investments made during the entire year of 2019. During the third quarter of 2020, the company received proceeds of $45.9 million from the sale of two investments and received partial paydowns of $3.9 million from five investments. During the quarter, the company sold the position in community funding CLO for $42.5 million. While this has been an attractive investment for Stonecastle Financial's portfolio over the past five years, the asset was about to reset with a step-up in rate. resulting in a net contribution of lower earnings. In addition, we made the decision to sell the entire position as a preemptive move to reduce the potential credit risk of the underlying assets and to enhance the risk profile for the entire portfolio. Although we did not spend all the proceeds during Q3, we have been active making investments in Q4, which I'll address momentarily. The $3.9 million in paydowns included a partial paydown of two regulatory capital trades, NANSA and Syntota, both of which were purchased at discounts during the market dislocation of Q2. This was an anticipated outcome, and these assets were able to contribute risk-adjusted returns of 13.5% and 12.1% respectively. Subsequent to the end of the quarter, the company made investments of approximately $13.7 million with a weighted average coupon rate of 8.4%. One of the investments, an alternative capital security, has an expected yield to maturity of 9.85% and yield to call of 10.7%. In addition, we purchased community bank preferred stock with a coupon of 9%. With Q3 and Q4 investments made to date, making up approximately 75% of the sales and proceeds from Q3, we believe the total portfolio investments, which currently show a net decline, will be made up with continued portfolio activity throughout the balance of the year. We expect the origination pipeline to continue to be strong in Q4, and we will provide more details of the four-quarter transactions on our next call. For all our banking-related investments, the portfolio is managed for income generation and capital preservation. We also look at investment capacity to offer total return to the portfolio on a risk-adjusted basis. At quarter end, the estimated annualized effective yield generated by the invested portfolio, excluding cash and cash equivalents, was approximately 9.18 percent. The alternative capital securities, represented approximately 38% of the total investments, and community bank-related investments represented approximately 46% of the portfolio. A full schedule of investments can be found on our website. Before I turn the call over to Pat, I want to touch upon the relative value of Stone Castle Financial stock. At the quarter end, Stone Castle Financial stock traded at a 7% discount to NAV with a 7.8% dividend yield. This is in comparison to other vehicles as the financial sector Spider Fund, which had a dividend yield of approximately 2.24%, or the Invesco KBW Bank Index that traded at an approximate 3.12% dividend yield during the same period. We believe Stonecastle Financial is also an attractive value relative to the Bloomberg Barclays U.S. Aggregate Bond Index, which traded at an approximate 2.01 percent distribution yield at quarter end. I'd like to point out that as of September 30th, Stone Castle Financial traded 537 basis points wide to the average dividend yields of the income-oriented vehicle peer group just mentioned. Now I want to turn the call over to Pat to discuss the financial results and provide details on the underlying net asset value of the company.

Thank you, Sanjay. As I do each quarter, I will present the financial results by going through the components of the company's quarterly results in detail. The net asset value at September 30th was $20.89, up 62 cents, or 5%, from the prior quarter, including reinvestment of dividends. Before I review the components of NAV, I want to note that in mid-October, the company reported the estimated month-end September NAV to be $20.93, which was 4 cents higher than our quarter-end NAV of $20.89. This difference was due to a minor adjustment related to preparing the consolidated financials. As you know, we are publishing monthly estimated NAVs to provide clarity and transparency for our shareholders. Therefore, the NAV as of September 30th and quarter-end is $20.89. Now on to the breakdown of the NAV components. The NAV is comprised of four components, net investment income, realized capital gains and losses, the change in value of the portfolio's investments, and lastly, distributions paid during the period. Let's review these components. Gross income for the quarter was $4.3 million, or $0.65 per share. Net operating expenses for the quarter were $1.5 million, or $0.23 per share, resulting in net investment income for the quarter of $2.8 million, or 42 cents per share. This compares to 41 cents reported in the prior quarter, up a penny per share. Realized capital gains and losses in the quarter is the second component affecting the change in NAV. The net realized capital losses from investments were approximately $2.7 million, or 42 cents per share. Realized losses due to foreign currency transactions were approximately $530,000, or 8 cents per share. The third component, changes in unrealized appreciation or depreciation of the portfolio, relates to how the value of the entire investment portfolio has changed from the previous quarter end to the current quarter end. For the third quarter, the total quarterly change in that unrealized appreciation on investments and foreign currency transactions was $6.7 million or up $1.02 per share. An unrealized appreciation on written options of $332,500 or $0.06 per share. I want to point out gains and losses from foreign currency hedging activities do not impact our net income. The fourth component affecting the change in net asset value is distributions. The cash distribution for the quarter was $0.38 per share paid on September 30th to shareholders of record on September 25th. In summary, we began the quarter with a net asset value of $200.27 per share, During the quarter, we generated net income of $2.8 million, net realized capital losses of approximately $3.3 million, and the annualized value of the portfolio increased by $6.7 million. The sum of these components, offset by a distribution of $0.38 per share, resulted in a net asset value of $20.89 per share at September 30th, which was up $0.62 from the prior quarter. Turning to the valuations for our portfolio holdings, It is worth noting that the vast majority of the portfolio continues to be independently marked from broker-dealer quotes. For the quarter, approximately 81% of the portfolio prices or marks reflect a minimum of two quotations or actual closing exchange prices. These quotations represent an independent third-party assessment of the current value of the portfolio. This should provide a greater degree of confidence in the company's underlying value versus other publicly traded closed-end funds and BDCs that self-mark their portfolios. At quarter end, the company had total assets of $149.9 million, consisting of total investments of $147 million, and cash, interest, and dividends receivable in prepaid assets totaling $2.9 million. As Sanjay mentioned, we expect the asset base to grow based on the Q4 investment pipeline. Our dividend yield at the end of the quarter was approximately 7.8%. Now let me update you on the balance of our credit facility. On September 30th, the company had $10 million drawn from the facility, worth 7% of total assets, leaving $52 million available to draw. Based on regulated investment company rules, we may only borrow up to 33.3% of our total assets. Now I want to turn the call back over to Sanjay for closing remarks.

Thank you, Pat. Now, operator, I would like to open up the call for questions.

Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question comes from line of Chris O'Connell with KBW. Please proceed with your question.

Good evening, gentlemen. Good evening. So I guess I just wanted to start out with the CLO sale. You know, I know that you guys have maybe seen that as an opportunity to refinance, and maybe if you could just walk through as well the I thought that you had said in the prepared comments that the rates were going to go up and that that was part of the decision, you know, for exiting that investment. I mean, I guess, you know, by rates, wouldn't that be, you know, a higher yield for you receiving?

Hi. Chris Assange. I'll take the first part here. Pat, just feel free to add something later if I've forgotten. So just as a way of background, that $45 million position was an equity position in CELO 2015. And in the way it was structured, it had notes ahead of it, essentially about $200 million that had a cost of capital somewhere in the 500s. the way it was structured initially was that five years post-issuance, those liabilities that are ahead of that 45-month equity tranche were going to step up by about 70 basis points. But the underlying assets there, the earning assets were community banks. And so if you think about it, what you're earning on those community banks now is going to be net earnings on those community banks are going to be less than what you were making before because liability costs in the COO was going to go up by 70 basis points. And so that was going to lead to lower earnings. That was one. Number two is, and if you think about it, for a fund this size with a fairly concentrated position, being $45 million, and, you know, we took this as an opportunity to diversify our holdings. And then number three is it did need to get refinanced. The CELA liabilities had to get refinanced. And we also didn't want to take a capital markets risk, especially what we saw how spreads kind of blew out on liabilities back in March, April, May. And so, you know, that... coupled with also the banks, generally speaking, that were held as assets in this CLO were about half the size of the rest of our portfolio, we also took this opportunity to improve the overall risk profile. So that was kind of a few reasons as to why we decided to exit this position at a gain from essentially where it was marked at. And so hopefully that helps.

I can just add in that with regard to that, you know, we did see a nice markup from where it was marked at June 30th. So we picked up an extra, you know, almost $470,000 in value from where it was marked in June versus the sale price. So other than that, Sanjay kind of nailed it there.

Great. That's helpful. And then looking at – the alternative capital investment, you know, demand and yields going forward. It seems like the yields have come down a bit. I mean, I know, you know, generally you were saying the market was at, you know, plus 900 to 1,000 basis points prior above LIBOR. I guess where are you seeing those new yields or those new spreads coming on up?

Sure. So the yields that you're seeing on our new alternative capital security investments is kind of reflective of the risk profile that we are willing to take this year, especially after, again, what happened with COVID, et cetera. And so the reason you're seeing lower yields than something that we had initially discussed is because it reflects, those structures reflect a much more conservative portfolio. The underlying assets are backing the securities and also the structure. So from that perspective, you know, these are more conservative investments that are, again, a reflection of the kind of risk that we are seeing out there. So we're just being very prudent in kind of what we are buying.

Got it. So in terms of the pool, then, I guess, of alternative investments that you are looking at to put on balance sheet versus the overall market, I guess, where are you seeing those spreads at now?

Sure. So the spreads that we're seeing today are kind of ranging between the L plus 9s and L plus 10s. to, you know, the high single-digit stuff of yields that we are showing to you for the investments in 3Q. And just based on our analysis of the underlying investments, just so happens that so far we have kind of more gravitated from a risk-adjusted basis towards the high single digits, but we are seeing yields that are ranging in the low double digits to the high single digits. You know, one thing I was bringing attention to is that From a yield-to-call basis, you know, some of these investments are yielding in the double digits versus when you're kind of looking at it from a yield-to-maturity basis.

Got it. So, I mean, is it fair to say that, you know, over the next two to three quarters that the investment yield, you know, pending any changes in the overall, you know, macro rate environment, going to remain kind of in this, you know, high to low nines range compared to what was kind of high nines to low tens previously?

Yeah, I mean, based on what our pipeline is today and assuming all things constant, you know, we expect, you know, we expect yield to be in the nine-ish type of range going forward, again, with all things constant.

Great. That's helpful. And then on the expense side, you notice that there's, like, a few upticks in overall kind of other expenses, you know, more notably, I guess, in professional fees, you know, and a few other, you know, minor line items. Are those expected to kind of revert back to what had been kind of the low 400s range going forward?

Yes, yeah. You know, we had a few adjustments we needed to make on professional fees and valuation fees, et cetera. But, yeah, I think the combination of that along with kind of truing up and making sure that going into Q4 were accrued appropriately. So I think you are going to see those come down a bit in fourth quarter to more what you've seen in previous quarters. Great.

That's helpful. And then I appreciate all your comments around credit quality and the overall bank market or community bank market right now and some of that reserve info surrounding the banks that are underlying your portfolio. Is there any pockets of risk that you're ultra-focused on coming out of the 3Q updates? or where deferrals kind of, you know, to the extent they're disclosed by the banks, you know, are remaining higher than you would like to see?

Yeah, so as it relates to deferrals, let me take that last part of the question first, is in discussion with our banks, kind of what we are seeing out there is they've come down meaningfully. And then, as you might recall, at the peak, some of these banks are seeing like 20-plus type of percent deferral rates. And now you're kind of looking at the low single digits. And so, from that perspective, you know, that's improved materially for the banks. You know, just looking at our portfolio of banks, you know, net income is up versus 1Q and 2Q. And it's almost kind of reached the levels of what kind of what we saw in the fourth quarter of last year. For a risk basis, actually kind of what I and we see is more of a loan growth possible issue. And a lot of businesses out there are being very prudent from what we are seeing and talking to our management teams where, you know, they're not overloading themselves with debt. I can give you an example of a bank that we spoke recently with in our portfolio, had a $10 million revolver line and pre-COVID, this company was asking for like a $12 million line because they were going to utilize it. And today that line is almost at an unused capacity because the company is doing a better job of managing working capital, et cetera. But, you know, having said that, obviously that coupled with NIM, they are a little worried about their income going forward. but overall we have seen a growth in the loan book, at least as it pertains to our portfolio of banks that we own. And so, you know, that's kind of how I see more of a risk to the company's P&L, our bank's P&L being NIM, contraction NIM, and not meaningful growth in the loan book.

Great. That's all I had. Thank you.

Your next question comes from the line of Bryce Rowe with National Securities. Please proceed with your question.

Thanks a lot. Good evening.

Good evening. Hello there.

Hi. Hey, Sanjay, I wanted to ask about the unrealized appreciation on some of the alternative securities. But, Kerry, you know, what's driving that? Is that a rate thing? Is it a credit? You know, is that purely just credit spreads coming in? Was there something specific, you know, to some of the specific securities that would drive some of the appreciation?

Sure. Sure. Do you want to take that first part, or do you want me to?

Yeah, I'll take a little bit of that. I'd say just on kind of the mathematical side, we did buy a number of these in Q2 at very good, very attractive pricing. So that I can speak to right away. And interestingly enough, you know, we mentioned that there were a couple of paydowns this quarter. and one of them being with NANSA and Sonata. Both of those, you know, we had purchased one of them at $87 and changed in $93, and we had paydowns on those at par. So definitely got some great deals there. So I'd say on the one side, on the math side, certainly we got some really great deals, and most of the others we also bought at discounts, some at very nice discounts in the 80s. I'd say number one, which is opportunistic purchasing, and then I'll throw it back to Sanjay to give some thoughts on where the pricing is going today.

Sure. So, Bryce, just to add a little bit more color to what Pat said, back in doing the dislocation back in March, April, as repo lines came due for some managers out there, to get inside with those repo lines, you know, they had to deliver. And, you know, what you do at that point is you take your best asset that's got the highest mark and you sell it. And that's exactly what happened. And just like some community banking securities that we kind of bought at a pretty attractive price, we kind of saw the same thing in alternative capital securities. And, you know, we were all over those in terms of looking at them, analysis, and then deciding to buy them. And so, you know, that's kind of what you – that's kind of how that opportunity came about. And, you know, obviously with the market normalizing a little bit more, you know, you're kind of seeing appreciation there. And in certain instances that you have realized, again, because, you know, those securities got partially repaid. It turns out what we're seeing in the new issue market, kind of the same. But, again, I want to make a distinction that, you know, we are seeing LIBOR plus 9, LIBOR plus 10 type of transactions. And, yes, we have bought some high single-digit type of transactions. But, again, based on our analysis, based on our outlook, you know, we are investing in more of the conservatively structured alternative capital securities that, you know, actually work really well for the fund, and they are very accretive.

That's helpful, Sanjay. And just maybe for the benefit of me and others that, you know, aren't as familiar with the alternative capital securities, what makes one more conservatively structured than one that's not?

Sure. So, you know, we can start with just the asset base, looking, you know, like we usually tell you that, the underlying assets, generally speaking, are investment grade. And so what we'll move from, for example, let's just say a portfolio of assets that initially was coming in at like a BBB minus average rating, we'll move up in rating category to make it more like a BBB, BBB plus type of security. So obviously moving up in the rating category, which is a proxy for risk, the securities generally carry a little bit of a lower return, right? Yep. And so, you know, that's one of the primary ways of how we go about getting a more conservative security. Okay.

That's good commentary. And then, you know, I appreciate your comments about the current fourth quarter pipeline across the alternative capital securities universe being in the, and I think I heard this correctly, $3.5 to $4 billion for new issuances. And you made the comment about the issuer base expanding. So I was wondering what the pipeline might have looked like, I don't know, a year ago, just for comparative purposes. And then when you talk about the number of issuers expanding, What's driving that? Is that just familiarity with the structure and the capital treatment? I'm just wondering what you think there.

Sure. So before I can answer the fourth quarter purchases that we did here today, it's a mix between alternative capital securities and community banks, right? but focusing more on the alternative capital side of it, the $3.5 to $4 billion, worth noting there, that's kind of what you're seeing the issues to be in the fourth quarter of this year. Obviously, you know, just like anything else, our credit selection process, you know, we participate in some and we don't participate in some. In terms of the issuer base growing, It's a reflection of particular banks' balance sheets and kind of what they did during 2019 in terms of adding on risk to their balance sheet, coupled with where the equity markets are for issuing additional Tier 1 capital. Like we have said before in our previous comments, the most efficient way to address a bank's balance sheet, one of the most efficient ways to do that is to issue more alternative capital securities. So there are some newcomers that have come to us, to the market during this quarter, and we have participated in some of their deals, is, you know, they are, given market conditions, they're kind of finding the most efficient way to right-size their risk profile is to issue additional alternative capital securities.

Okay, that's helpful. And maybe one more question for me, just considering the repayment or the sale of the larger asset here this quarter, the CLO, I'm wondering how you think about kind of repayment risk within the portfolio now, you know, relative to the individual securities within your portfolio.

Sure. So in terms of repayment risk, we're not seeing anything. We didn't see anything out of the ordinary during 3Q or in 4Q to believe that there's an acceleration in repayment. And so this is something that's fairly average, I would say. And, you know, just kind of give you a little bit more background. I think we ended Q1 with $133 million of invested assets. It was up to about 165 in Q2, and then Q3 was 147, and that was really more related to that sale of that CLO position. And for the balance of Q4, we are looking at a decent amount of deals, and all things constant, we do expect to see a net growth from here, and so from an income perspective, et cetera. more additive than Q3. Again, all things constant. Got it.

All right. Well, thank you for answering all the questions, and good to see the continued progress in terms of the originations.

Yeah. Well, thank you very much, and thank you for your support. Welcome.

Your next question comes from the line of Devin Ryan with JMP Securities. Please proceed with your question.

Great. Hi, Sanjay. Hi, Pat. How are you? Good. How are you doing, Dan? Doing well. Most questions have been asked, but I just want to spend a moment on credit. I think Sanjay could talk about this a bit, but if we think about a scenario where there is a second shutdown and maybe that creates more stress in the system, how are you thinking about the portfolio in that scenario to break the gap between now and the vaccine? And Could that also create opportunities from a pricing perspective in the things you're looking at, just given that it is kind of topical at the moment here?

Sure. So the last part of your question, you know, the short answer to that is yes, but I'll add a little color to that. From a credit perspective, I think we all are pleasantly surprised, you know, how well actually, relatively speaking, the credit space has done as it relates to defaults, I think, you know, back in March and April, a lot of estimates were fairly high. And, you know, I think, generally speaking, we're going to be under, like, 10%. And if you were to look at, say, the high-yield market combined with the leveraged loan market, right? And so, from that perspective, you know, the stimulus came in to benefit everybody, Main Street, primarily. So from that perspective, again, we see going forward, we are cautiously optimistic about the default rates going forward. Then, again, if we were to see a prolonged recovery or added shutdowns because of COVID, what we expect there, again, is, you know, we expect another stimulus bill to come through. And we've seen a story play out before where I think, you know, they will support the consumer and small businesses. So, and again, talking to all our banks, kind of that's kind of where the head is. And, you know, a lot of the banks have made, you know, have increased reserves for, you know, going into 2021. And so, you know, Again, they're cautiously optimistic about it, and so are we. I hope I answered your question.

Yeah, that's terrific. Thanks, Sanjay. And then maybe just a follow-up, because this is coming up in a lot of my client conversations, just the numerous scenarios of the election outcome and how that could impact financials. And I think to the extent it is a Biden administration and a red Senate or close to that, you know, the The progressive agenda, it doesn't feel very likely. It's probably not going to have a lot of legislative change. But, you know, one area that could see some changes on the regulatory front, just given that that may be easier to push through in a Democratic administration. I'm curious if there's anything you're focused on at the moment that you feel like could be an issue or, you know, maybe even create opportunities, or is it just too early at this moment?

Yeah, I would say it's a little too early, but it seems like it's pointing towards a split Congress, which obviously would dampen kind of the things as it relates to the progressive agenda, right? But also, having said that, I think from what we are hearing, our discussions, our monitoring of the markets, et cetera, the focus probably initially is going to be more on the economy, And then in the next, maybe taxes, then say bank regulations at this point.

Yeah. Okay. Terrific. To be determined. Well, thank you guys for taking the questions and congrats on a good quarter.

Thank you. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. And I would like to turn the call back to Mr. Sanjay Bonsalai, closing remarks.

Thank you, operator. Thank you all for listening. We obviously appreciate all your interest in Stone Castle. I look forward to speaking with you all during next quarter's conference call. In the event that we do not touch base prior to year end, I just want to wish everyone a healthy and happy holiday season. Thank you and good night.

Good night. This concludes today's conference. You may now disconnect. Thank you for your